Technol-AG - February 2022

The Law Commission of England and Wales and the Scottish Law Commission have published a joint report on the safe and responsible introduction of self-driving vehicles. As automated vehicles do not currently fit within existing legal frameworks, the joint report recommends the introduction of a new Automated Vehicles Act in order to establish a clear distinction between features which assist drivers, such as adaptive cruise control, and those that are self-driving. The joint report has been laid before the UK and Scottish Parliaments, which will decide on the next steps. The report recommends that if a vehicle is authorised to have self-driving autonomous driving system features, and these are engaged, legal accountability changes. When the features are engaged, a 'user-in-charge' (a person positioned to drive who is able to take control of the vehicle) will have immunity in relation to many offences stemming from the way the vehicle drives, such as careless or dangerous driving.

If vehicles have no user-in-charge, responsibility for the vehicle may rest with a 'no user-in-charge' operator. However, this operator would not be criminally liable in relation to offences falling under the bracket of dynamic driving.  Regarding civil liability, it is proposed that insurers would directly compensate victims who suffer injury, or provide compensation for damage resulting from a vehicle driving itself (without a requirement to prove any party is at fault).

Our clients are increasingly looking to develop technologies which are applied to connected and autonomous vehicles. The absence of a regulatory framework for something as significant as autonomous vehicles means it is difficult for these technologies to be legally commercialised and could impede technological advances in this area, or mean clients look to apply their technologies outside of the UK. 

The UK is competing with nations across the globe to put in place legislation to govern autonomous vehicles. The first mover will be held out as a leader in this area.

In a judgment handed down on 26 January 2022 in the matter of Transparently Ltd v Growth Capital Ventures Ltd [2022] EWHC 144 (TCC) the Technology & Construction Court (TCC) refused a claim by Transparently for interim relief which would have required Growth Capital Ventures (GCV) to provide software, source code and other documents required for completion of an IT platform. 

GCV had entered into an agreement to develop Transparently's negotiation management platform; following delays in delivery of the software Transparently terminated the agreement, alleging material breach of contract. 

O'Farrell J refused the application for interim relief on the basis that Transparently had not identified an arguable case that it was entitled to delivery up of the software, source code and documents, and that the company had other available remedies under the Software Development Agreement and Conditional Equity Purchase Agreement it had entered into with GCV.

This judgment reflects that the hurdle for a mandatory injunction to compel a party to take steps is high and the Court will need strong evidence to unseat the status quo.

In the particular contract in issue, termination of the agreement triggered a completion payment.  Even though Transparently was asserting delay and material breach of contract, the Court found that payment needed to be made in order for Transparently's right to delivery up to arise.  

Therefore, in drafting and negotiating development agreements, parties may want to consider carefully the interaction between termination and payment provisions as they relate to the entitlement to source code and related development documents, especially in respect of any distinction between alleged fault and no fault scenarios.  A staged transfer of rights may be appropriate depending on the project plan and subject matter of the agreement.

A joint survey by the British Chambers of Commerce (BCC) and IT company Cisco has found that one in ten firms have suffered a cyber-attack in the last year, rising to more than one in seven for larger firms. The cross-sector survey also found that almost half of companies believed their IT systems have been left more exposed to attack following the huge increase in people working from home during the pandemic. Despite this increase in attacks, the survey also discovered that approximately eighty percent of companies do not currently have accredited cyber security measures in place to protect against attacks.

Cyber-security should be a priority for companies. However, the shift to greater levels of working from home brings with it the question of whether companies have the infrastructure in place to ensure the same level of protection against cyber-attacks as in the office. It is important for companies to review their cyber security regimes to ensure they are fit for purpose in light of today's working habits. 

Helpfully, following on from the above article, the National Cyber Security Centre (NCSC) has published guidance for organisations on the actions to take when the cyber threat is heightened. The guidance, designed for public sector companies, large organisations and cyber security professionals, sets out when organisations might face a greater threat and the steps to take to improve security.

The first step is to understand the importance of keeping cyber security systems under review in line with working arrangements. The NCSC guidance can help companies to pinpoint actions that can be implemented. It discusses the basic actions that all companies should be taking, as well as specific steps for larger companies. The guidance breaks down the various facets that make up a strong cyber security system, such as a process to review backups, and provides accessible advice about measures that companies should implement to strengthen their cyber security.

We're increasingly being asked by our clients to assist them with ransomware attacks, both in terms of putting strategies in place to deal with such attacks and dealing with attacks when they occur. Please get in touch if you would like to discuss this further.

We will shortly be making available to our clients the results of AG's T&O Risk Review, a survey in which we ask T&O lawyers from AG's Commercial and Disputes teams to rank the issues they most frequently encounter when negotiating T&O contracts and advising their clients on T&O disputes and the importance of the issue in the context of the deal. 

The survey provides a unique perspective on what issues most frequently arise in T&O contracting and the importance of these issues to businesses. It is also a very useful tool for helping our clients to identify the key risks / 'crunch' points in T&O contract negotiations and for helping our clients to manage business-critical IT vendor relationships. This is becoming ever more important as businesses become increasingly dependent on technology, and resiliency of business processes attracts ever greater regulatory scrutiny. 

If you would like a copy of the results of the T&O survey, or if you would like to discuss the results and what they mean for your business further with a member of our team, please reach out to the contacts below.

The T&O Risk Review is one of a number of resources we will be making available to our clients over the coming months focusing on managing key IT vendor relationships. Watch this space in future editions of the Technol-AG newsletter for more information.